Series 55

Study Question of the Week: July 10, 2013 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 7, Series 24, Series 55, Series 62, and Series 79. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Question (Relevant to the Series 7, Series 24, Series 55, Series 62, and Series 79):

An issuer would like to buy back shares and has already made a once-per-week block transaction this week. The inside quote for the security is 18.30 – 18.34. The last transaction was 18.32. Under SEC Rule 10b-18, which two of the following statements are true?

I. The maximum number of shares the issuer could buy in a day is 25% of the ADTV for the previous four weeks.

II. The maximum number of shares the issuer could buy in a day is 30% of the ADTV for the previous four weeks.

III. The highest price the issuer could buy at would be $18.32.IV. The highest price the issuer could buy at would be $18.34.

Answers:

A. I and III

B. II and IV

C. I and IV

D. II and III

Correct Answer: A. I and III

Rationale: Under SEC Rule 10b-18,when an issuer buys back their own shares, the bid may not be higher than the last transaction or the highest independent bid, whichever is greater. The maximum daily purchase cannot exceed 25% of the ADTV (average daily trading volume) over the previous four weeks.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

Study Question of the Week: January 16, 2013 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 7, Series 24, Series 55, and Series 62. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Question (Relevant to the Series 7, Series 24, Series 55, and Series 62):
Which of the following is not true of an ECN?

Answers:

A: ECNs can act in an agency or a principal capacity

B: ECNs allow institutional investors to trade with other investors excluding the broker as a go-between

C: Subscribers to an ECN may include institutional investors, broker-dealers and market makers

D: ECN traders can remain anonymous

Correct Answer: A

Rationale: Some standard characteristics of ECNs include:

a. ECNs always act in an agency capacity and do not trade for their own account.
b. ECNs allow institutional investors to trade with other investors excluding the broker as a go-between. Fourth market participants rely on ECNs.
c. Subscribers to an ECN may include institutional investors, broker-dealers and market makers. Individuals that wish to trade through an ECN must have an account with a broker-dealer and their order can then be routed to the ECN for execution.
d. ECNs allow traders to remain anonymous.
e. ECNs are often open 24 hours a day, and are therefore often used by traders after regular market hours.
f. Subscribers pay a fee to the ECN to participate.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

Study Question of the Week: December 26, 2012 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 7, Series 24, Series 55, Series 62, Series 65, and Series 66. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Question (Relevant to the Series 7, Series 24, Series 55, Series 62, Series 65, and Series 66):

ABCD is an actively traded security with an inside market of 19.25 – 19.95. A market maker receives an order to sell 100 shares and buys the security from the customer at a net price of ______________. Choose the net price that makes the most sense given what you know about markups, markdowns, and net prices.

Answers:

A: 18.75
B: 19.25
C: 19.95
D: 20.45

Correct Answer: A

Rationale: On a sell order in an active competitive market, the net price will contain a markdown from the best bid. In this case the only price that is lower than the best bid is the $18.75. The markdown amount is calculated by taking $19.25 – $18.75 = $.50. The markdown is $.50/$19.25 = 2.60%.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

ANSWER–Study Question of the Week: August 29, 2012 Edition

As a follow up to yesterday’s question, here is your question PLUS answer and rationale: Continue reading

As a follow up to yesterday’s question, here is your question PLUS answer and rationale:

Question (Relevant to Series 24, Series 55, Series 62, Series 7)

To calculate a markdown as a percentage, which of the following are used?

Answers

A: The lowest bid

B: The highest bid

C: The highest offer

D: The lowest offer

Correct Answer: B

Rationale: A markdown is calculated when a customer sells shares. The customer would sell their shares to the market maker who is willing to buy at the highest bid. The markdown is calculated by dividing the amount kept by the market maker by the highest bid.

Study Question of the Week: August 29, 2012 Edition

Today, we’ll be starting a weekly series highlighting a licensing exam study question from the Solomon Online Exam Simulator question database. Continue reading

Today, we’ll be starting a weekly series highlighting a licensing exam study question from the Solomon Online Exam Simulator question database.

Let’s get started!

Question (Relevant to Series 24, Series 55, Series 62, Series 7)

To calculate a markdown as a percentage, which of the following are used?

Answers

A: The lowest bid

B: The highest bid

C: The highest offer

D: The lowest offer

Be sure to submit your answers in the comments section and check back tomorrow for the correct answer and rationale!

Happy studying!